When you establish a family trust, take some time to consider who should be your trustee. Unfortunately, even with the best of intentions, you may not always make the right choice. If the creator and/or co-creator of a family trust, a co-trustee, or a beneficiary of the trust feels that the trustee is acting improperly, there are ways to go about removing a trustee and/or replacing a trustee.
When a family trust is established, the trust agreement designates the trustee and/or co-trustees. It also should designate one or more successor trustees in case the initial trustee(s) can no longer perform their duties. The successor trustee takes over in cases where the prior trustee resigns, dies, or is removed. Removing a trustee is a legal process that requires petitioning the probate court and is governed by the terms of the trust agreement and by state law.
Trust agreements usually allow the trustor to freely remove a trustee during their lifetime. The trustor is still living, he or she does not need to give a reason for the removal and can simply execute an amendment to the trust agreement.
In cases where the trustor is either deceased or incapacitated, the problem becomes one for the co-trustee, successor trustee or beneficiaries. Removal can be initiated by a co-trustee, successor trustee or a beneficiary of the trust. This can happen in cases in which a conflict arises between co-trustees, and one is seeking to remove the other or where a successor trustee or beneficiary believes the current trustee is failing to perform its trust duties.
A party seeking to remove a trustee will need to file a petition with the court to have them removed unless the current trustee agrees to the removal.
Reasons to remove a trustee
Legal grounds for removing a trustee from a family trust may include:
- Violating the agreement
- Mismanaging assets, whether intentionally or through negligence
- Fraud or misappropriation of trust assets
- Charging excessive fees
- A decline in mental capacity
- Financial insolvency of the trustee
- Conflict of interest
- Lack of cooperation with other trustees or beneficiaries
- Breach of fiduciary duty
Taking your case to the court
Petitioning the court to remove a trustee can be filed in probate court. Sufficient evidence must be submitted to the court demonstrating that the trustee has violated the trust agreement or their fiduciary duty and that replacing them is in the best interest of the trust.
Removal and/or replacing a trustee and establishing a trust, should not be undertaken without the help of a competent and experienced trust and estate litigation attorney. The Leo Law Office handles petitions to remove a trustee as well as other trust administration responsibilities. Contact our office to request a consultation.